Dimon says losses indefensible, still reform skeptic

WASHINGTON (Reuters) – JPMorgan Chase & Co Chief Executive Jamie Dimon used his much anticipated appearance before lawmakers to apologize for the bank’s multibillion-dollar trading loss but he also made clear he will still criticize how Washington tries to curb Wall Street.

The Senate Banking Committee scheduled the hearing to grill Dimon on how a hedging strategy in a seemingly low-risk London office morphed into a complex bet that has produced at least $2 billion in losses.

Dimon, confident and amiable through most of Wednesday’s hearing, appeared angry only briefly in an exchange with a senator over whether JPMorgan needed taxpayer assistance during the 2007-2009 financial crisis.

Analysts said the appearance was a success for Dimon as he revealed few new details about the trading losses, struck a contrite tone when needed, and punched back when provoked.

“There was uncertainty going into the testimony today and that uncertainty is now off of the table,” said Gerard Cassidy, an bank equity analyst at RBC Capital Markets. “There is relief in the market.”

Shares of JPMorgan, the largest U.S. bank by assets, closed up 1.6 percent on Wednesday, outperforming the KBW Bank Index, which closed down slightly.

Dimon told senators the trades started as a genuine hedge that would make the firm a lot of money if a credit crisis hit, staring down questions about whether it was really a speculative bet hidden from shareholders and regulators.

“This particular synthetic credit portfolio was intended to earn a lot of revenue if there was a crisis. I consider that a hedge,” Dimon said. “What it morphed into, I will not try to defend.”

But Dimon was not so chastened that he backed off of his long-standing criticism of Washington reforms.

The 2010 Dodd-Frank financial oversight law, he said, has produced a swarm of uncoordinated regulators, and he warned policymakers that they must carefully craft the Volcker rule ban on banks making speculative bets with their own money.